A LITTLE INSIGTH ON AGRICULTURAL INVESTMENT

A substantial increase in agricultural investments in developing countries are needed to combat poverty, archive food security and nutrition goals. Agricultural investment is the most vital and effective strategy for poverty reduction in rural areas, where the majority of the world’s poorest people live. Investing in agriculture reduces poverty and hunger through multiple pathways. However, low investment in the agricultural sector and into smallholder farms in particular in most developing countries over the past 30 years has resulted in low productivity and stagnant production. The recent food crisis has exposed these weaknesses, as agricultural production was slow to respond to rising prices. Yet, the agricultural sector faces many challenges over the next four decades. World agriculture must feed a projected population of 9 billion people by 2050, some 2.5 billion more than today, and most of the growth in population will occur in countries where hunger and natural resource degradation are already rife.

Crop and livestock production systems must become more intensive to meet growing demand but they must also become more sustainable. Additional investments of over US$80 billion every year are needed in agriculture to meet targets for reducing poverty and the numbers of malnourished. Meeting the targets in a sustainable manner that preserves natural resources and is conducive to long-term development will require even more capital. The renewed interest in increasing investment in primary agricultural production in African countries is therefore a positive development. Agricultural investments by domestic and foreign investors can generate a wide range of benefits such as:

Higher productivity

Increased food availability

Employment creation

Poverty reduction

Technology transfer and

Access to capital and markets.

However, these benefits cannot be expected to arise automatically. They will depend to a large extent on a wide range of factors including the investment contract, the type of business model, the linkages with smallholders, and the institutional framework in place in the host country.